EUR/CHF Outlook:
The outlook is likely to decrease, as the rate is trading below its recent average and near recent lows, pressured by strong headwinds.
Key drivers:
• Rate gap: The European Central Bank maintains interest rates, contrasting with the Swiss National Bank’s potential consideration of reintroducing negative rates to manage a strong Swiss franc.
• Risk/commodities: The price of Brent Crude oil is currently high, which can affect the euro by potentially increasing import costs for the Eurozone, thereby impacting its economic outlook.
• One macro factor: The eurozone's inflation has fallen below the ECB's target, raising concerns about the need for future rate cuts.
Range:
The EUR/CHF is likely to drift within the recent 3-month range, as current factors do not signal movements to the extremes.
What could change it:
• Upside risk: A stabilization in geopolitical tensions could improve euro performance and strengthen the EUR against the CHF.
• Downside risk: Continued strong demand for the Swiss franc as a safe-haven currency could further pressure the EUR/CHF exchange rate.
